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Situation worsening for mortgage borrowers in ‘serious’ arrears

by: Emma Lunn
  • 14/11/2014
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Data from a mortgage debt rehabilitation provider has shown that the average debt of a homeowner in "serious" arrears now stands at £7,021.

Ascent Performance Group, part of Irwin Mitchell, said the £7,021 figure for Q3 2014 shows a 1.1% rise from Q2 but a 20% jump from Q1 when the figure stood at £5,584.

‘Serious’ arrears are defined as defaults on monthly payments for approximately six consecutive months. At this point many lenders pass these customers onto debt rehabilitation specialists to help recover the money they are owed.

Mark Higgins, chairman at Ascent Performance Group, said: “A welcome development in recent years has been mortgage lenders giving customers more time to settle their arrears problems before passing them onto debt specialists, especially since the introduction of the Mortgage Market Review. However, if they can’t make contact with the customer then their debt will naturally increase before we are instructed.

“Therefore, it is our job to make contact with these customers and agree affordable, long-term repayment plans that divert the danger of possession.”

Based on the research, the top ‘serious’ mortgage arrears hotspots are Warrington, Walsall and Preston, with residents owing an average of £14,073 each to lenders.

“What this shows is that it is not just those living in expensive properties that fall into the worst arrears. Other factors such as social deprivation, lower income and higher unemployment levels also, understandably, have a big impact,” said Higgins.

Of all customers who have fallen into serious arrears in Q3 over half have begun to positively resolve their situation.

The Council of Mortgage Lenders said this week that arrears and repossessions fell in Q3.

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